THE ASSISTANT COMMISSIONER OF STATE TAX AND OTHERS versus M/S. COMMERCIAL STEEL LIMITED on 3 September 2021

1. Leave granted.

2. This appeal arises from a judgment of a Division Bench of theHigh Court of Telangana dated 4 March 2020.

3. The High Court in the exercise of its writ jurisdiction underArticle 226 of the Constitution set aside the action of the appellants incollecting an amount of Rs 4,16,447 from the respondent towards taxand penalty under the Central Goods and Services Tax Act 2017 (CGST)and State Goods and Services Tax Act (SGST) and directed a refundtogether with interest at the rate of 6% per annum from 13 December2019. A further direction has been issued to the State of Telangana toconsider initiating disciplinary proceedings against the AssistantCommissioner. Costs of Rs 25,000 have been imposed on the firstappellant, who was the first respondent before the High Court.

4. The respondent is a proprietary concern engaged in the businessof iron and steel and is registered under the Central Goods and ServicesTax Act 2017 and has been allotted a GST code. The respondentpurchased certain goods from a dealer, JSW Steel Limited, Vidyanagar,Karnataka, under a tax invoice dated 11 December 2019. Theconsignment of goods was being carried in a truck bearing registrationNo KA 35 C 0141. While it was proceeding from the State of Karnataka,it was intercepted on 12 December 2019 at 5.30 pm at Jeedimetala. Thetax invoice indicated that the goods were earmarked for delivery atBalanagar, Telangana. The case of the appellants is that Balanagar issituated between the State of Karnataka and Jeedimetala and that no

A

B

C

D

E

F

G

H

Areasonable person would cross Balanagar and then turn around to goback to the place of destination. The purchase value of the goodsappeared to be in the amount of Rs 11,14, 579 from the tax invoices.

5. The case of the revenue was that in the guise of an inter-Statesale, the respondent was attempting to sell the goods in the local marketBby evading SGST and CGST. An order of detention was issued in FormGST MOV-06 on 12 December 2019 and a notice was served on theperson in charge of the conveyance. The respondent paid the tax andpenalty, following which the goods and the conveyance were releasedon 13 December 2019.

C6. The respondent instituted writ proceedings under Article 226of the Constitution before the High Court in order to challenge the orderof detention dated 12 December 2019 and the notice which was issuedunder Section 20 of the IGST Act 2017. A refund of tax was sought. Acounter affidavit was filed on behalf of the appellants before the HighCourt.D

7. The High Court entertained the writ petition and ordered therefund of the amount collected towards tax and penalty together withinterest. The High Court has observed that a mere possibility of a localsale would not clothe the officials to take such an action and there wasno material to indicate that an attempt was made by the respondent toEdeliver the goods at a different place and to sell them in the local marketevading CGST and SGST. The High Court has also come to theconclusion that since the vehicle was being driven from Karnataka bythe local driver from that State, “it is perfectly possible for the driver tolose his way on account of being unfamiliar with the roads” in HyderabadFand bypass Balanagar to proceed to Jeedimetala.

8. Mr Prashant Tyagi, counsel appearing on behalf of the appellantsubmits that the High Court was in error in entertaining the writ petitionunder Article 226 of the Constitution, having regard to the statutoryalternative remedy which is available under Section 107 of the CGSTGAct. Counsel urged that while the existence of an alternative remedyunder the statute is not an absolute bar to the maintainability of a writpetition under Article 226, none of the exceptions which have beenenunciated by the judgments of this Court apply in this case. Hence, ithas been urged that the High Court ought not to have entertained thewrit petition. On merits, it has been submitted that the High Court hasHproceeded on the basis of surmises.

9. On the other hand, it was urged by Mr Shaik Mohamad Haneef,counsel for the respondent that the High Court having entertained thewrit petition, it was justified on merits in setting aside the detention andthe order by which the tax and penalty was collected under duress.Hence, it is urged that no interference of this Court is warranted.

10. Section 107 is extracted below:

“107. Appeals to Appellate Authority – (1) Any personaggrieved by any decision or order passed under this Act or theState Goods and Services Tax Act or the Union Territory Goodsand Services Tax Act by an adjudicating authority may appeal tosuch Appellate Authority as may be prescribed within three monthsfrom the date on which the said decision or order is communicatedto such person.

(2) The Commissioner may, on his own motion, or upon requestfrom the Commissioner of State tax or the Commissioner of Unionterritory tax, call for and examine the record of any proceedingsin which an adjudicating authority has passed any decision or orderunder this Act or the State Goods and Services Tax Act or theUnion Territory Goods and Services Tax Act, for the purpose ofsatisfying himself as to the legality or propriety of the said decisionor order and may, by order, direct any officer subordinate to himto apply to the Appellate Authority within six months from thedate of communication of the said decision or order for thedetermination of such points arising out of the said decision ororder as may be specified by the Commissioner in his order.

(3) Where, in pursuance of an order under sub-section (2), theauthorised officer makes an application to the Appellate Authority,such application shall be dealt with by the Appellate Authority asif it were an appeal made against the decision or order of theadjudicating authority and such authorised officer were anappellant and the provisions of this Act relating to appeals shallapply to such application.

(4) The Appellate Authority may, if he is satisfied that the appellantwas prevented by sufficient cause from presenting the appealwithin the aforesaid period of three months or six months, as thecase may be, allow it to be presented within a further period ofone month.

A

B

C

D

E

F

G

H

A(5) Every appeal under this section shall be in such form and shallbe verified in such manner as may be prescribed.

(6) No appeal shall be filed under sub-section (1), unless theappellant has paid—

(a) in full, such part of the amount of tax, interest, fine, fee andBpenalty arising from the impugned order, as is admitted by him;and (b) a sum equal to ten per cent. of the remaining amount of taxin dispute arising from the said order, subject to a maximum oftwenty-five crore rupees, in relation to which the appeal hasCbeen filed:

Provided that no appeal shall be filed against an order under sub-section (3) of Section 129, unless a sum equal to twenty-five percent. of the penalty has been paid by the appellant.

D(7) Where the appellant has paid the amount under sub-section(6), the recovery proceedings for the balance amount shall bedeemed to be stayed.

(8) The Appellate Authority shall give an opportunity to the appellantof being heard.

(9) The Appellate Authority may, if sufficient cause is shown atany stage of hearing of an appeal, grant time to the parties or anyof them and adjourn the hearing of the appeal for reasons to berecorded in writing:

E

Provided that no such adjournment shall be granted more thanFthree times to a party during hearing of the appeal.

(10) The Appellate Authority may, at the time of hearing of anappeal, allow an appellant to add any ground of appeal not specifiedin the grounds of appeal, if it is satisfied that the omission of thatground from the grounds of appeal was not wilful or unreasonable.

G

(11) The Appellate Authority shall, after making such further inquiryas may be necessary, pass such order, as it thinks just and proper,confirming, modifying or annulling the decision or order appealedagainst but shall not refer the case back to the adjudicatingauthority that passed the said decision or order:

H

Provided that an order enhancing any fee or penalty or fine in lieuof confiscation or confiscating goods of greater value or reducingthe amount of refund or input tax credit shall not be passed unlessthe appellant has been given a reasonable opportunity of showingcause against the proposed order:

Provided further that where the Appellate Authority is of theopinion that any tax has not been paid or short-paid or erroneouslyrefunded, or where input tax credit has been wrongly availed orutilised, no order requiring the appellant to pay such tax or inputtax credit shall be passed unless the appellant is given notice toshow cause against the proposed order and the order is passedwithin the time limit specified under Section 73 or Section 74.

(12) The order of the Appellate Authority disposing of the appealshall be in writing and shall state the points for determination, thedecision thereon and the reasons for such decision.

(13) The Appellate Authority shall, where it is possible to do so,hear and decide every appeal within a period of one year fromthe date on which it is filed:

Provided that where the issuance of order is stayed by an orderof a court or Tribunal, the period of such stay shall be excluded incomputing the period of one year.

(14) On disposal of the appeal, the Appellate Authority shallcommunicate the order passed by it to the appellant, respondentand to the adjudicating authority.

(15) A copy of the order passed by the Appellate Authority shallalso be sent to the jurisdictional Commissioner or the authoritydesignated by him in this behalf and the jurisdictional Commissionerof State tax or Commissioner of Union Territory Tax or anauthority designated by him in this behalf.

(16) Every order passed under this section shall, subject to theprovisions of Section 108 or Section 113 or Section 117 or Section118 be final and binding on the parties.”

11. The respondent had a statutory remedy under section 107.Instead of availing of the remedy, the respondent instituted a petitionunder Article 226. The existence of an alternate remedy is not an absolutebar to the maintainability of a writ petition under Article 226 of the

A

BC

D

E

F

G

H

AConstitution. But a writ petition can be entertained in exceptionalcircumstances where there is:

(i) a breach of fundamental rights;

(ii) a violation of the principles of natural justice; B(iii) an excess of jurisdiction; or

(iv) a challenge to the vires of the statute or delegated legislation.

12. In the present case, none of the above exceptions wasestablished. There was, in fact, no violation of the principles of naturaljustice since a notice was served on the person in charge of theCconveyance. In this backdrop, it was not appropriate for the High Courtto entertain a writ petition. The assessment of facts would have to becarried out by the appellate authority. As a matter of fact, the HighCourt has while doing this exercise proceeded on the basis of surmises.However, since we are inclined to relegate the respondent to the pursuitDof the alternate statutory remedy under Section 107, this Court makesno observation on the merits of the case of the respondent.

13. For the above reasons, we allow the appeal and set aside theimpugned order of the High Court. The writ petition filed by therespondent shall stand dismissed. However, this shall not preclude therespondent from taking recourse to appropriate remedies which areEavailable in terms of Section 107 of the CGST Act to pursue the grievancein regard to the action which has been adopted by the state in thepresent case.

14. Pending applications, if any, stand disposed of.

F

Ankit Gyan

Appeal allowed.

G

H